ITAT Raipur Judgments — October 2022

The Tribunal found that while the assessee had submitted some evidence, certain confirmations were still unsigned and the evidence produced before the CIT(A) was not verified properly. Therefore, the matter was restored to the AO for proper verification and re-adjudication.

The Tribunal held that the addition based on a net profit rate was not justified without proper analysis. Regarding the loan, the assessee had discharged her onus by providing sufficient evidence, and the AO had erred in inquiring into the source of the source.

The Tribunal held that the disallowance of interest under Section 36(1)(iii) was not justified if the firm had sufficient non-interest bearing funds available for partner withdrawals. Regarding Section 36(1)(va), the Tribunal dismissed the ground, relying on a Supreme Court decision regarding timely deposit of employee contributions.

The Tribunal upheld the CIT(A)'s decision to delete the additions. It found that the assessee had discharged the primary onus by producing required documents, and the loan was duly repaid. The AO's reliance on investigation reports not confronted to the assessee was also noted as a violation of natural justice.

The Tribunal held that Section 14A of the Income Tax Act, 1961, cannot be applied when the assessee has not earned any exempt income during the relevant previous year. Therefore, the disallowance made by the Assessing Officer was deleted.

The Tribunal held that the reassessment proceedings initiated by the Assessing Officer were not in accordance with the law. The belief formed by the AO for reopening lacked a rational connection to the material available and was speculative.

The Tribunal held that if the reassessment order is invalid due to an invalid assumption of jurisdiction, the PCIT cannot revise it under Section 263. Therefore, the PCIT's order was quashed.

The Tribunal noted that the CIT(E)'s rejection order dated 28.09.2019 was based on the assessee's request to withdraw its application for registration under Section 12AA. However, the assessee already possessed a valid registration granted on 09.08.2019, which was never revoked. The subsequent letter from the CIT(E) dated 23.11.2020 clarified that the registration granted on 09.08.2019 shall continue to be in force, even after modifications to the society's objects. The Tribunal found that the denial of exemption by the AO, based on the earlier rejection order, was not justified given the subsequent clarification. It acknowledged a communication gap within the department. Therefore, the Tribunal restored the issue to the CIT(E) to revisit his order dated 28.09.2019, clarify the status of the assessee's registration under Section 12AA, and issue directions to the authorities below to grant exemption as per law. The appeal was allowed for statistical purposes.

The Tribunal held that the CIT(A) was justified in deleting the addition on account of director's remuneration as the assessee provided justification and there was no evidence of tax evasion. However, the addition on account of unexplained cash credit was sustained as the assessee failed to discharge its onus.

The Tribunal held that the coal shortage was a stock variation and not a loss due to negligence, and that the assessee was eligible for the deduction under Section 80IA(4)(iv)(c) based on substantial renovation and modernization of transmission and distribution lines, following its own prior decisions.

The Tribunal held that the assessee's contention to restrict the addition to the difference between Rs. 1 Crore and additions already sustained in the hands of family members was correct. The Tribunal also agreed that the remainder amount should be divided among family members.

The Tribunal held that the reassessment proceedings initiated by the Assessing Officer were not in accordance with the law. The belief formed by the AO for reopening lacked a rational connection to the material available and was speculative.

The Tribunal held that the reassessment proceedings initiated by the Assessing Officer were not in accordance with the law. The belief formed by the AO for reopening lacked a rational connection to the material available and was speculative.

The Tribunal noted that the tax effect was below the monetary limit of Rs. 50,00,000/- as per CBDT Circular No. 17/2019. The Revenue's representative also sought liberty to withdraw the appeal.

The Tribunal upheld the CIT(A)'s decision, finding that the AO failed to provide cogent evidence to prove the transaction was bogus or that the investor's creditworthiness was not established. The Tribunal noted that the investor's details and transaction documents were provided and the AO did not conduct independent inquiries.

The Tribunal upheld the CIT(Appeals)'s deletion of the addition related to short yield, finding the calculation of yield to be correct. For the bogus purchases, the Tribunal's decision in the revenue's appeal was to be applied mutatis mutandis.

The Tribunal held that the cash deposits could not be treated as unexplained cash credit under Section 68, but confirmed the addition under Section 69A as unexplained investment. The assessee's explanation was found unsubstantiated.

The CIT(Appeals) deleted the additions made by the AO. The revenue appealed this deletion, arguing that the assessee failed to discharge the primary onus of proving the identity, creditworthiness, and genuineness of the transactions.

The Tribunal upheld the CIT(A)'s decision to apply the assessee's overall disclosed GP rate of 2.62% to quantify the profit on unaccounted sales, finding no infirmity in the quantification. The AO's ad-hoc addition of 25% was deemed illogical.

The Tribunal partly upheld the CIT(Appeals)'s order, modifying the method of calculating additions for bogus purchases. For rice, a small addition was directed, while for paddy, the addition sustained by the CIT(Appeals) was vacated.

The Tribunal upheld the CIT(Appeals) decision regarding the deletion of additions on account of suppression in yield. The Tribunal found that the assessee's yield, including broken rice, was in line with government norms.

The Tribunal held that while the assessee is eligible for 80G exemption, the CIT(E)'s rejection based on procedural lapses without providing a proper opportunity to rectify them violated natural justice. The matter was restored to the CIT(E) for a fresh hearing.

The Tribunal held that the AO could not have been guided by the test of necessity for commission expenses, but rather by whether they were wholly and exclusively for business purposes. The Tribunal also noted that similar commission expenses were allowed in prior and subsequent years.

The Tribunal partly upheld the CIT(Appeals)'s order, modifying the method of calculating additions for bogus purchases. For rice, a small addition was directed, while for paddy, the addition sustained by the CIT(Appeals) was vacated.

The Tribunal held that Section 40A(3) is not applicable as no expenditure was claimed as a deduction. The addition under Section 69C for one property was vacated as it was reflected in the books. For the other property, the matter was remanded to the AO for verification of the source of funds.

The Tribunal held that while the Pr. CIT was justified in disallowing a loss of Rs. 1.77 crore, which was confirmed by SEBI as artificial, he was not justified in summarily disallowing the entire claimed loss of Rs. 5.09 crore.

The Tribunal upheld the CIT(Appeals)'s decision regarding the Rs. 3 crore advance. The Tribunal found that the assessee had provided substantial documentary evidence to both the AO and the CIT(Appeals) to substantiate the authenticity of the transaction. This evidence included the sale agreement, details of M/s. Jessica Commercial Pvt. Ltd., an affidavit from the company confirming the advance and its source, ledger accounts, bank statements, and documents provided under Section 133(6) to the CIT(Appeals). The Tribunal noted that the revenue had not rebutted this evidence with any material proving the contrary. The reason for the cancellation of the 'agreement to sell' was also explained as the land being acquired by the Chhattisgarh Housing Board. Therefore, the Tribunal found no justification for the AO to draw adverse inferences. Consequently, Grounds of appeal No. 2 to 7 raised by the revenue were dismissed. The judgment does not explicitly detail the decision on the labour expenses disallowance (Ground 1) or the Section 14A/Rule 8D issues (Grounds 8-12), but the overall dismissal of the revenue's appeal implies these were also decided in favour of the assessee or not pressed by the revenue. The operative direction was to dismiss the revenue's appeal.

The Tribunal upheld the CIT(Appeals)'s deletion of the addition related to short yield, finding the calculation of yield to be correct. For the bogus purchases, the Tribunal's decision in the revenue's appeal was to be applied mutatis mutandis.

The Tribunal held that the assessee failed to substantiate that the tankers were put to use for business purposes during the previous year, thus disallowing depreciation. However, regarding fuel expenses, the Tribunal found the matter needed further investigation and restored it to the AO.

The Tribunal upheld the CIT(Appeals)'s decision, finding that the assessee had sufficiently substantiated the commodity trading loss and the sources of credits to the partners' capital accounts. The admission of fresh evidence under Rule 46A was also deemed proper.

The CIT(Appeals) correctly deleted the additions related to share application money as the assessee had provided sufficient evidence, including the assessment order of the investor company. The CIT(Appeals) also correctly deleted the addition on account of suppressed production.

The Tribunal held that the AO's reasons for reopening were misconceived. It clarified that there is no mandatory 85% utilization requirement for exemption under Section 10(23C)(iiiad), and the 12A registration was not relevant for the exemption claimed under Section 10(23C)(iiiad) for the year in question.

The Tribunal held that the disallowance of finance charges paid to NBFC without TDS was not justified as the amount was paid and not outstanding. Regarding security deposits, the Tribunal found that the assessee had discharged their onus to prove the identity, creditworthiness, and genuineness of the creditors.

The Tribunal held that the AO failed to record satisfaction before issuing the notice under Section 153C and did not conduct proper inquiries to establish the receipt of undisclosed income by the assessee. The addition was not based on convincing evidence.

The Tribunal held that the reopening of assessment under Section 147/148 was bad in law as it was based on information already available during the original assessment, constituting a 'change of opinion'. The assumption of jurisdiction by the AO was therefore beyond the authority of law.

The Tribunal held that the reopening of the concluded assessment beyond four years was invalid as the conditions stipulated in the first proviso to Section 147 were not met. The AO had not established any failure on the part of the assessee to disclose material facts fully and truly.

The Tribunal held that the assessee had discharged the onus by providing confirmations, ITR acknowledgments, and bank statements of the creditor. The AO and CIT(A) failed to conduct further inquiries or provide contrary evidence, making their disallowance unjustified.

The Tribunal held that the disallowance was made on an ad-hoc basis without specific material to prove the expenditure was not genuine or not for business purposes. The allowability of expenditure should be tested under Section 37 of the Act, not solely on the basis of a proportionate increase in sales.

The Tribunal upheld the CIT(Appeals)'s decision, stating that each assessment year is independent and the AO could not summarily adopt yield percentages from previous block assessments. Previous decisions on similar issues for group entities were also noted.

The Tribunal held that the AO had conducted sufficient inquiry regarding the share application money, examining documents and responses from the investor company. Therefore, the PCIT's revisionary order under Section 263 was not justified.

The Tribunal found that the assessee's claim of trade advance was an afterthought, as evidenced by the significant gap between the cash receipts and the subsequent bills. The CIT(A) had rightly confirmed the penalty.

The Tribunal held that the CIT(A) erred in confirming the addition regarding the difference in gross receipts without considering the service tax liability and supporting evidence. It also held that the ad-hoc addition for household expenses was unjustified without material evidence.

The Tribunal held that the purchase and sale of medicines by the hospital was ancillary to its main charitable object of providing medical relief and not a separate business activity. Therefore, the condition of maintaining separate books of accounts under Section 11(4A) was not applicable.